In
the immediate aftermath of the 9/11 terrorist attacks on the World Trade
Center, Congress scrambled to enact new security initiatives aimed at
protecting U.S. citizens from future harm.
In their haste, however, no thorough economic impact studies were conducted,
and many unintended consequences have resulted from their actions. This study attempts to unravel the specific
affects of such measures as C-TPAT (Customs-Trade Partnership Against
Terrorism) and the 24-Hour Rule on the international textiles industry by
examining the U.S. Retail Industry and the U.S. Textiles and Clothing
Manufacturing Industry as well as International Textiles and Clothing
Manufacturers.[1]
In
conducting this study, it quickly became clear that the effects of post-9/11
security measures cannot be considered without thoroughly examining the effects
of other international trade regulations on the textiles and clothing (T&C)
industry. The findings of this study
show that if all else remained unchanged, certainly the friction added to
international sourcing by such security measures would cause increased supply
side costs that would eventually be born by customers. However, as the sunset clause of the
Multi-Fiber Agreement[2]
- a quota system which regulates the export of textiles and apparel from 47
countries – nears, U.S. Apparel Retailers see an opportunity to reorganize and
simplify their supply chains, which will likely result in a net savings for
that industry.
While
new security initiatives provide further impetus for U.S. retailers to simplify
and restructure their supply chains, these same measures may also work to
insulate the U.S. textile industry from the overseas competition, an affect
similar to that of the quota system. In order to determine the net effect on
the U.S. textile industry, one must take into account both the effects of the
liberalization of textile trade, and the effects of post-9/11 security
measures. Although further research is
needed in order to elucidate the exact levels of both these factors, it is the
belief of the authors of this study that such security measures will indeed
work to protect U.S. textile and apparel manufacturers, especially those that
already center their strategy on their ability to quickly react to Just-In-Time
sourcing practices of many U.S. apparel retailers.
When
considering the effects of the synchronous enactment of post-9/11 security
measures and the liberalization of the T&C industry, it is imperative to
look at not only how such policies affect the U.S. economy but also how such
measures will work to restructure the world economy more generally. Industry experts agree that the likely
beneficiaries of the liberalization of trade in the T&C industry will be
countries with a well-established infrastructure that allows the integration of
all stages of the production process (from cotton-growing to final
assembly). The authors of this report
argue that the demands of security measures like C-TPAT will work towards this
same end resulting in a shift in production from LDCs to more highly developed
countries especially China, India, and Pakistan.